Islamic social finance initiatives undertaken by Malaysian Islamic financial institutions: are they doing enough?

• Main Authors: Zainuddin, Ulfah Mansurah, Yahya, Afiqah Nur, Zulkarnain, Izyan Farhana, Ariff, Kamilah, Jani, Norsuria, Hassan, Rusni
• Format: Conference or Workshop Item
• Language: English; English
• Published: 2020
• Subjects: HG3368 Islamic Banking and Finance
• Online Access: http://irep.iium.edu.my/86714/1/86714_Islamic%20social%20finance%20initiatives.pdf; http://irep.iium.edu.my/86714/2/86714_Islamic%20social%20finance%20initiatives_certificate.pdf; http://irep.iium.edu.my/86714/; https://www.iium.edu.my/institute/iiibf/online-conference-isfpcps-september-2020

Islamic financial institutions (IFIs) in Malaysia have played a significant role as an alternative to the conventional system by the offering of diversified instruments based on Shariah principles. Besides offering products and services to clients, the overall operations of IFIs are distinguished from that of the conventional financial institutions. The emergence of Islamic finance, in principle, acts as a remedy to the financial world by significantly contributing to the social development of humankind. However, in the quest for development and growth, the IFIs tend to disregard their philanthropic essence and become purely driven by commercial incentives and less emphasis in providing a social impact to society. Nonetheless, the recent trend of Islamic finance seems to be positively aligned to the socially-driven initiatives as an added value to their commercial business operations. The initiative taken by Bank Negara Malaysia (BNM) in introducing Value Based Intermediation (VBI) in 2018 as a strategy to enhance the social impact of Islamic finance industry is highly commendable. However, it has been observed by industry practitioners that VBI is not something new to the IFIs. In fact, the IFIs have been practising the Islamic social finance initiatives since the very beginning of their operations. This paper is therefore to examine and analyze the initiatives of selected Islamic financial institutions in Malaysia in their implementation of Islamic social finance activities. This paper employs qualitative methods through library-based research of relevant literature consisting of books, article journals, manuscripts, guidelines and other relevant materials. The expected findings of this study are that some initiatives have been taken by IFIs in Malaysia to adopt Islamic social finance in their operations. However, the vacuum is still there that needs to be filled by the IFIs in exerting the impactful socially driven initiatives for the people and community at large. What are the problems, issues and challenges faced by the IFIs? Are they doing enough? These questions will be examined and analysed further in this paper.